Considerations When Selecting a Consultant
Webster defines consult as
"to seek the opinion or advice of another person for making a decision."
Using consultants properly improves the quality of your decisions and thus
the viability and profitability of your project or business. The material
outlined below can be used to help you choose the proper consultant for
Do I Need
When investigating a market opportunity or
starting a business venture, you need to make a thorough outline of all of
the skills, resources and information needed to complete the task. Many of
these may be provided by you and the others individuals involved in the
project. However, you will probably realize that no one has all the skills
necessary to thoroughly investigate a market opportunity or start a
value-added agriculture business.
So you will probably need to use
consultant(s). You may use them to conduct a feasibility analysis, help
create your business, do "due diligence" on a project, or other purpose.
The discussion below focuses on selecting and using private consultants.
Assistance is also available from "public sector" service provides.
Understanding the consultant's role is
critical in creating a viable business.
- Provide Accurate and Reliable
Information. This is the reason you hire a consultant. Choosing
the wrong consultant or poorly communicating with the consultant can
result in irrelevant information of questionable accuracy.
- Improve your Decisions.
The role of a consultant is to supplement your knowledge so you can make
better, more informed decisions.
- Not a Substitute for Your
Responsibility. Occasionally, in value-added agriculture
groups, I hear the phrase "The consultant said it will work, so it must
be a good idea." Don't abdicate decision-making to the consultant.
Decision-making is your role and responsibility.
of the Consultant
Consultants vary greatly in their level of
expertise. Consultants loose their value when they get out of their area
- What is the Consultant's
Special Area of Expertise? Does the consultant's area of
expertise match what you want them to do for you? Ask if the consultant
has done similar work for other groups. Choosing a consultant with the
exact area of expertise you want can increase the quality of the work
and may reduce the cost. Problems with consultants often arise when they
work in areas in which they are unfamiliar.
- What is the Consultant's
Knowledge of the Industry? Has the consultant worked in the
industry? Does the consultant personally know the industry players?
Choosing a consultant who is knowledgeable of the industry will improve
the quality of the result and decrease the amount of time needed to
achieve the result.
- Will the Consultant Provide an
Independent Perspective? Will the consultant provide a
perspective that is based on actual research finding? Or, is the
consultant apt to provide hearsay and information not documented?
- What are the Research
Capabilities of analyzing existing statistical information? Can
they effectively do "surveys" or "focus groups" if needed? Do they know
people to ask in the industry?
- Ask for a Sample of the
Consultant's Work. Request from the consultant reports and
other materials he/she has developed for other clients that relate to
the focus of the work you are asking for.
Although references are a valuable tool
when selecting a consultant, they are often overlooked or ignored.
- Ask for References.
Specifically ask what the consultant did for the reference. Was the
consultant's work the same work you want the consultant to do for you?
If it matches, the reference can provide you valuable information about
the consultant's work. If it doesn't match, the reference may be of
limited value to you.
- Ask the Reference if They Were
Satisfied With the Consultant's Work. If not, why? If possible,
ask for a copy of the report the consultant did for the reference.
- Ask the Reference In-Depth
Questions about the Consultant's Work. This may trigger
memories of problems or concerns they may have had with the consultant.
- Check More Than One or Two
References. If possible, check with clients of the consultant
not listed as references.
- Check with Clients not Listed
as References. Consultants list clients who will give positive
references. Clients not listed as references may be the most valuable to
you. Time spent finding and contacting these clients may be a good
- What is the Consultant's "Track
Record"? How long is their clientele list? For consultants in
business for the long-term, their most valuable asset is a list of
satisfied clients. In today's environment, there are many people taking
early retirement or who have been recently downsized and have begun
consulting. Check with their former employers and others in the
for Proposals (RFP)
This is a more formalized way of selecting
a consultant. It is a way of communicating your needs. It also makes
comparing consultants easier. Specific topics you may want to include in
an RFP are presented below.
- Provide Information about You
and Your Project. Include information about you as a business
entity. Provide the background of the project. Establish the credibility
of the business and/or project. Establish a reason for the consultant to
respond to the RFP.
- Be Specific About What You Want
the Consultant to Do. Identify key objectives and critical
questions you want addressed. Provide as much relevant information as
possible. Include specifics about the project, geography, market, size
of venture, transportation, industry, technology, etc.
- Specify Reporting.
Outline what you want for interim and final reports. Will the reports be
oral or written or both? If oral presentations will be included, where
and when will they be given? Will spreadsheets or other types of models
- Provide a Timeline.
This will include a timeline for bid submission, consultant selection
and project completion.
- Establish Criteria of How You
Will Select the Consultant. Criteria may include credentials
and qualifications, experience, cost, responses from references,
responsiveness to RFP, etc. This needs to be done in advance.
- Include a Sample Contract.
Include a sample contract in the RFP. Include all of the items you think
are relevant. If you do not include a sample contract, the consultant
will provide one, with terms favorable to him/her.
- Request a Proposal from at
least Three Consultants. This allows you to adequately compare
Interviews are critical when selecting a
consultant. Don't skip this step in the selection process.
- Personally Interview the
Candidates. In some situations a conference call interview may
be appropriate. However, if possible, a face-to-face interview is
preferred. To give structure to the interview, have a prepared set of
questions you want to ask.
- Pick a Consultant with Whom You
Feel Comfortable. You may be spending a lot of time with this
person in an intense environment. The relationship between you and the
consultant is important. Do you trust the consultant? Have they
established credibility with your group?
- Choose a Consultant with Whom
You Can Communicate. Open and straightforward interaction is
important to the success of the project.
Design your own contract and contract
- Specify the Deliverables.
Specifically identify the topics you want the consultant to address. If
you don't, you run the risk that the results will be too general to be
useful or the consultant may miss the point.
- Ask Specifically for Everything
You Want From the Consultant. If you don't ask for it, you may
not get it. The consultant will probably establish the cost of their
services based on what is specifically outlined in the contract.
- Develop a Specific Action Plan
and Timeline. This outlines
what you want the consultant to do, how it will be done and when it will
be done. The report should contain clear, actionable information.
Specific penalties for not meeting the action plan and timeline should
be included in the contract.
- Ask for Transparency.
What are the data/information/experiences that the conclusions or
recommendations are based? If you are going to make a business decision
based in part on the consultant's recommendations, you have the right,
and in some situations an obligation, to know the background for the
- Who will do the Work?
You should have the consultant identify who will do the work. Specify
the names of the individuals and the specific tasks each is responsible
- Specify Reporting Requirements.
Specify when, how and where reports will be presented. Will interim
reports be required in additional to a final report? Will all reports be
in writing? When will the consultant be required to make a presentation
to the committee or board of directors?
- Specify the Compensation
Arrangement. The consultant may be paid a flat fee for the
services or an hourly rate. The consultant may ask for a deposit
up-front. It is important to consultants that payments are made in a
timely fashion. However, do not pay until the consultant's duties are
- Who Owns the Work Product?
Stipulate who owns the research or analysis (work product). In many
situations you will want to own the work product. This may include
confidentiality covenants and/or non-compete agreements.
- Include Provisions for
Non-Performance. To the maximum extent possible, reserve the
right to terminate the relationship. Identify what constitutes
non-performance of the contract. Stipulate the consequences for
- Liability for Incorrect
Information. Specify the consultant's liability for inaccurate
information or conclusions in the consultant's work product that may
lead to costly business decisions.
- Create the Proper Relationship.
Structure the relationship so the consultant will be considered to be an
independent contractor, not an employee.
the Consultant's Services
Cost is important when selecting a
consultant, but it must be measured against what you are buying.
- Negotiate the Price.
The price quoted by the consultant is usually subject to negotiation. Be
aggressive in negotiating the price. Do "comparison shopping" with other
consultants. Consult fees often vary considerably. However, realize that
being over-aggressive may, in some instances, require the consultant to
"cut corners" in conducting the analysis or providing services.
- Consider the Consultant's Value
to You. Be careful in simply choosing the lowest cost
consultant. Consider the "value" of the consultant's work to your
project. Value is the amount and quality of work that will be done
(questions answered and problems solved) for your project in
relationship to the price you will pay for the service. The lowest price
consultant may not be the best value for your project.
- Consider Your Value to the
Consultant. Some projects and clients are important to the
consultant's reputation. This may allow you to negotiate favorable
- Request a Specific Price.
Don't leave any items open-ended. Ask for a specific dollar limit or cap
on all items (travel, out-of-pocket expenditures, etc.).
Below are several additional items you
should consider when selecting and hiring a consultant.
- Can You Develop a Long-Term
Relationship with Your Consultant? A consultant who is involved
during the development of the entire project may be worth more than one
who will quickly disengage from the project. Consider avenues such as
alliances, equity positions based on performance, royalties or other
financial partnerships with your consultant to solidify their commitment
to your project.
- Does the Consultant Understand
Farmer-owned Projects? Have they worked with farmers in the
past? Farmer-owned projects often develop differently and members may
have a different set of values than traditional large company initiated
- Will the Consultant Work
Closely with the Group? Is the consultant willing to listen and
respond to producers' ideas?
- Be Careful of Side-Referrals.
Value-added groups often have several aspects of a project
going at the same time. Side referrals occur when you ask a consultant
you are currently working with on one aspect of the project for the name
of a consultant to do another portion of the project. Use care when
asking for these types of referrals. Consultants may work in a
close-knit group where they have a vested interest in the success of
- Watch for Conflict of Interest
Issues. A conflict of
interest can occur when the consultant has a vested interest in the
outcome of the consulting activities. For example, a consultant doing a
feasibility study has a conflict of interest if they expect to do
additional business if you decide to go ahead with the project.
Technology providers, construction companies, etc. doing feasibility
studies can fall into this category.
- Stay Involved in the Project.
You need to be involved with the consultant and make sure he/she knows
and understands the basic concepts of the project. Although you have
hired a consultant, you are still responsible for the project.
- Take the Time Needed to do it
Right. Properly selecting a consultant is not easy and may take
a lot of time. However, the payoff from the proper use of consultants
can be enormous. Conversely, the costs of poorly selected consultants
can be devastating to a business. So, time and effort spent choosing a
consultant is a good investment.
* Reprinted with permission.
Agricultural Marketing Resource Center, Iowa State University